Home News Local News City Council approves Leprino bond issue

City Council approves Leprino bond issue

0
“We hope these PILOT payments will help (Chaves County and the school district) in meeting their objectives,” says Mike Reidy, in front on right, senior vice president of corporate affairs for Leprino Foods Co. He and other members of Leprino and its legal firm listen to Roswell City Council discussions Thursday night. (Lisa Dunlap Photo)

Company agrees to increased payments to county, schools

After reaching agreements to pay Chaves County and the Roswell public school district $9.86 million in payments over 30 years, Leprino Foods Co. received the approval of the Roswell City Council to proceed with new industrial revenue bonds.

The Roswell City Council voted Thursday night to approve the ordinance that authorizes the city to take title of Leprino’s plant on Omaha Road for the 30-year life of the $150 million bonds, which will be purchased by a Leprino affiliate. Eight councilors approved the measure, with no opposing votes cast. Councilors Steve Henderson and Caleb Grant were absent.

“We are extremely excited to move ahead with the project and we are deeply grateful for the support that we have received throughout this process of issuing the revenue bonds,” said Mike Reidy, senior vice president for corporate affairs. “We look forward to working with all the members of the community going forward as we continue to support this wonderful town where we live and work.”

The first release of the bonds, Series A, for up to $90 million is expected to occur in the next few months. Series B for up to $60 million will be released at some later date. The money will be used to pay for the construction of a new wet whey processing facility, upgrades and improvements to facility wastewater systems, and repairs and improvements of the rest of the plant, which the company purchased in 1993.

Because the plant will belong to the city while the bonds are outstanding, the facility will be off the property tax rolls. The company also will be exempt from gross receipts taxes in certain instances.

The voluntary in-lieu payments to Chaves County and the Roswell school district — officially known as Payments in Lieu of Taxes (PILOT) — are intended to compensate local entities for the lost tax revenue. The Chaves County Board of Commissioners approved the county agreement June 27, while the RISD School Board voted to accept its agreement at a Tuesday meeting.

The payments represent a significant increase compared to the previous amounts negotiated for bonds first issued in 1994. Previously, the company worked out an agreement with the county only, paying what ultimately ended up being $130,000 a year. The Chaves County Assessor’s Office estimated that the company would have paid $440,000 a year if it were on the tax roll, given current rates and current valuations.

Now Leprino will pay the county $200,000 a year starting in 2020, with the annual amount to increase by 5% every five years. By the 25th year, or 2045, the company will pay the county $255,256.31. For the 30-year period, payments will total $6.8 million. The money will be used to maintain county roads used for dairy traffic, with priority given to roads around the Leprino plant.

Under the agreement with the Roswell Independent School District, Leprino will pay $90,000 a year, to increase 5% every five years. The total over 30 years will be $3.06 million.

Chad Cole, assistant superintendent for finance and operations for the school district, indicated that the district negotiated up to that amount, which he and Superintendent Ann Lynn McIlroy said was arrived at because it covers the salary and benefits for a technical education teacher.

“One of the reasons Mr. Cole and I really went for the $90,000 is that basically pays for a teacher,” she said at the school board meeting. “We are not restricted about how we have to spend these funds, but one of the things we are really committed to at this point and are working with Rob Tuttrup, the manager out there, very (diligently) on, is the creation of the workforce that are high-demand, high-wage positions, all of which are available there and in Leprino facilities worldwide.”

Reidy indicated at the school board meeting that the amounts negotiated with the county and schools is about one-third of what the company’s property taxes starting in 2020 have been estimated to be.

City Manager Joe Neeb talked about the significant contributions that Leprino has made as the area’s largest private employer with about 580 workers and as community members.

He said the company’s philanthropic contributions during the last year alone amounted to about $75,000, with 29 community organizations benefiting. Leprino also is a major participant in the Chile Cheese Festival, where they provide free tours of the plant.

City Councilors Juan Oropesa and Barry Foster commented on the importance of Leprino as an employer, philanthropic agency and education supporter.

“I read where they provide several scholarships for our graduating seniors who go to college,” said Foster. “I know several that have graduated with their engineering degrees and are coming back to work for them. So they are working with our schools. And I really appreciate them coming forward with the PILOT for our schools. They didn’t have to, but it is nice that they are doing it and working with our schools to make a difference in our education for our kids and our community.”

Reidy said he did not consider the requests for annual payments to be unreasonable.

“I think as you heard in the statement from Joe Neeb, we have long held the belief that it is important to provide strong and continued support to the communities where we live and work,” he said. “We are excited to continue to work with both Chaves County and the Roswell Independent School District as we move ahead, and we hope these PILOT payments will help them meet their objectives.”

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at reporter02@rdrnews.com.